Government debt in the Czech Republic rose by almost 550 billion year-on-year

Government debt in the Czech Republic rose by CZK 548.6 billion year-on-year to CZK 2.983 trillion in the third quarter of last year. The debt ratio increased from 40.4 percent to 45.2 percent of gross domestic product (GDP).

Compared to the second quarter, the debt increased by CZK 187.5 billion, representing a 1.7 percentage point increase in the debt ratio. The Czech Statistical Office (CSO) published the figures on its website Tuesday.

Government institutions managed a deficit of CZK 60.3 billion in the third quarter, CZK 17.4 billion higher than a year earlier.

This was mainly due to the performance of central government institutions, i.e., ministries and central authorities, whose deficit widened by CZK 24.4 billion year-on-year to CZK 69.5 billion. On the other hand, local government institutions, i.e., mainly local governments, and social security funds, i.e., primarily health insurance companies, ended in surplus.

The surplus fell from CZK 9.8 billion year-on-year to CZK 4.6 billion for local governments. The social security funds posted a surplus of CZK 4.5 billion.

According to the CSO, the increase in debt in the third quarter of last year was also significantly higher than the result of the general government. According to the statistics, government institutions borrowed CZK 127.2 billion more than their financing needs.

“Unlike in the past, on the liabilities side, the share of borrowings compared to securities issued is growing,” said Helena Houžvičková, director of the CSO’s government and financial accounts department.

Total government revenues rose 10.3 percent year-on-year in the third quarter of last year to reach 39.9 percent of GDP.

The year-on-year growth was mainly driven by increased revenues from taxes on production and imports, social contributions, income taxes, and interest received.

Total expenditure rose 12.2 percent year-on-year to 43.4 percent of GDP, with the most significant increases in other current transfers, social benefits, spending on gross capital formation, and interest earned. The CZSO recorded a decline in subsidies.